Chicago Business Litigation Lawyer Blog

Our Oak Brook covenant not to compete attorneys were interested to see a major non-compete lawsuit happening right here in Chicago. FierceWireless.com reported Jan. 19 that wireless telephone giant Motorola sued former executive David Hartsfield in federal court, claiming he will inevitably disclose Motorola’s confidential business information if he is allowed to take a new job at Finnish wireless phone company Nokia. Motorola is seeking a restraining order to prevent Hartsfield from taking the job.

Hartsfield resigned in December from a job developing CDMA technology at Motorola to take the position of vice president of CDMA at Nokia. In its lawsuit, Motorola claims that the non-disclosure agreement in Hartsfield’s employment contract will be violated if he takes the job. In particular, Motorola claims that it needs to protect product and pricing strategies. Hartsfield has filed a motion to dismiss the suit, arguing that it unreasonably interferes with his ability to make a living, and that Motorola has not identified any wrongdoing on his part. He also plans to argue that the non-disclosure agreements common in the wireless industry are not legitimate. Motorola has aggressively pursued non-compete and non-disclosure lawsuits in the past, including a 2008 non-compete lawsuit against an executive who left for Apple’s iPhone sales business. That case was dismissed in 2009.

DiTommaso-Lubin is not involved in this case. However, our Northbrook, Evanston, Waukegan, Joliet, Lisle, Downers Grove, Wheaton, Naperville, Aurora, Elgin, and Chicago non-compete contract attorneys believe Hartsfield could build a strong defense, if his claims are true. Although the federal court has diversity jurisdiction, it must apply Illinois law, which requires it to identify a legitimate business interest behind non-disclosure and non-compete agreements. If there is none, the law says Motorola may not restrain the otherwise legal business activity of Hartsfield moving to a competitor. Hartsfield claims CDMA is an industry-wide standard, not a technology proprietary to Motorola. Similarly, at least some of Motorola’s pricing information must be public knowledge. That means the company may have an uphill battle proving that this knowledge, at least, is a trade secret worthy of protection.

Continue reading "Motorola Sues Former Executive for Moving to Competitor Nokia -- Our Chicago Covenant Not to Compete Lawyers Defend and Prosecute Non-Compete and Trade Secret Lawsuits Throughout Illinois" »

As Chicago employee rights attorneys, we were interested to see what may have been the first unpaid overtime filing of 2010 in the U.S. District Court for the Northern District of Illinois. Harris v. Cheddar’s Casual Café, No. 20-cv-0045 (N.D. Ill.) was filed Jan. 5 by three former servers and bartenders who seek to certify a class of current and former employees denied overtime and tips by the Cheddar’s Casual Café chain of restaurants. Plaintiffs Donny Harris, Keith McKinstery and Shaniqua Bell allege that managers at a Cheddar’s in Boilingbrook, Ill shaved time off their timecards and required them to work off the clock in order to avoid paying overtime. They also allege that their tips were diverted to a tip pool that illegally included non-tipped workers.

The complaint in the case says plaintiffs, and other similarly situated workers, were required to clock in and out for their shifts using the chain’s computerized system. They allege that the restaurant, and manager Solomon Tristan, illegally manipulated the timesheets created by that system to remove hours. They also allege that they were encouraged to work before clocking in and after clocking out, further denying them overtime. Furthermore, the plaintiffs say, they were compelled to participate in a tip pool that included the restaurant’s “quality assurance” workers, who they say are not tipped employees. Under federal law, employers may not pay tipped employees less than minimum wage unless they are allowed to keep all their tips, or contribute only to a legal tip pool. Thus, the complaint said, Cheddar’s policies violate the Fair Labor Standards Act.

At Nationwide Consumer Rights, our Wheaton, Ill. overtime attorneys see cases like this frequently. Hourly employees such as waiters and bartenders are regular targets for employers who prefer not to pay all of the wages they owe, and even sometimes to skim their earned tips to pay other employees. This behavior relies on employees to stay quiet, either because they don’t know they have rights or because they’re afraid of punishment for speaking up. However, federal and state law is very clear employees must be compensated for all of their time at work, and paid time and a half for any time over 40 hours in a week. Failure to follow these basic requirements exposes companies to lawsuits seeking all of the back pay owed, attorney fees and any other costs incurred. In cases of egregious law-breaking, courts may also require employers to pay punitive damages -- money intended to penalize willful law-breaking.

Continue reading "Lawsuit Alleges Illinois Restaurant Shaved Hours From Servers’ Timecards" »

As Illinois consumer protection attorneys, we were pleased to see that an Illinois federal court has allowed a couple to continue a claim against their bank over a complex billing dispute. David Johnson’s Digital Media Lawyer Blog reported Sept. 2 on the case brought by Marsha and Michael Shames-Yeakel, a couple from Indiana who had $26,500 stolen from their home equity line of credit. Citizens Financial Bank held them liable for the loss, but they refused to pay. In response, the bank reported the “bad debt” to credit bureaus and threatened to repossess their home. The Shames-Yeakels sued Citizens. Shames-Yeakel v. Citizens Financial Bank, U.S.D.C., Northern District of Illinois, Case No. 07-c-5387.

According to a ruling posted by Wired (PDF), the Shames-Yeakels run an accounting and computer programming business out of their home. They had a business checking account as well as personal accounts and a home equity line of credit with Citizens, where they were customers for nearly 30 years. The HELOC was connected to their business checking account, but the four advances they took paid for personal expenses or expenses that mixed personal and business use, such as a new roof for their home, which includes their home office. In early 2007, an unknown person gained access to the HELOC and transferred the $26,500 to their business checking account, then eventually to a bank in Austria. They were unable to have the money returned, and Citizens held the Shames-Yeakels liable for the loss.

The Shames-Yeakels complained to Citizens, but to no avail; the bank pointed to language releasing it from liability in their online banking agreement. They also complained to the federal Office of Thrift Supervision, which said Citizens’ actions were legal. The Electronic Funds Transfer Act doesn’t protect HELOCs, it said, and the Truth in Lending Act covers only personal, not business, accounts. It found that the HELOC was a business account because it was linked to a business checking account. The Shames-Yeakels sued Citizens for violations of the Truth in Lending Act, the Fair Credit Reporting Act, the Electronic Funds Transfer Act, the Indiana Uniform Consumer Credit Code and common-law negligence and breach of contract.

Citizens then moved for summary judgment, the basis for the ruling at hand. U.S. District Judge Rebecca Pallmeyer granted summary judgment on the count relying on the Electronic Funds Transfer Act and restricted plaintiffs’ use of the Fair Credit Reporting Act. However, she denied it as to negligence and the Truth in Lending Act. The Digital Media Lawyer Blog, and Wired, focused on the negligence claim, which argued that the bank provided inadequate online security. Citizens employed a widely used contractor named Fiserv to protect its accounts with a simple username and password. The Shames-Yeakels argued that Citizens should have used a multi-layered security system using a “token” that provides additional verification. They also cited security experts suggesting such a system as early as 2005 and said Citizens failed to warn them of known security risks.

In her analysis, the judge started by reminding readers that summary judgment seeks only to decide whether there’s a genuine issue of material facts at hand. In the case of the negligence claim, she found that there was. In Indiana and many other states, courts have found that banks have a duty to protect customers’ confidential information. “If this duty ... is to have any weight in the age of online banking,” she wrote, “then banks must certainly employ sufficient security measures to protect their customers’ online accounts.” She found the evidence presented about multi-layered security measures, and reports warning Citizens to use these measures, sufficient to require a trial, but warned the plaintiffs not to make arguments relying on the discarded causes of action.

The judge also rejected Citizens’ arguments for summary judgment on the TILA claim, which was based on their claim that the HELOC was for business purposes. Noting that caselaw requires judges to look at the substance rather than the form of transactions, she found that “Plaintiffs’ use of their home equity line of credit appears overwhelmingly personal in nature.” This is enough to survive summary judgment and require a proper trial, she found. She also found partially for the Shames-Yeakes on their Fair Credit Reporting Act claim. Because Citizens reported the debt as delinquent but failed to note that the debt was disputed, it may have violated the FCRA. However, she rejected the couple’s argument that Citizens failed to make reasonable investigations of their credit reporting disputes, and granted summary judgment on that claim only.

Continue reading "Court Rules Claim for Negligent Online Security Against Bank May Go Forward" »

As Illinois and Chicago area consumer rights attorneys with a substantial auto dealer fraud and lemon law practice, we were pleased that a federal district court ruled in October that a manufacturer may be held liable for a dealer's implied warranty under the Magnuson-Moss Warranty Act. Semitekol v. Monaco Coach Corporation, No. 06 C 6424 (Oct. 21, 2008), is an RV dealer fraud case pending in the Northern District of Illinois. The plaintiffs, a married couple, purchased a Monaco motor home from an RV dealer, Barrington Motor Sales. The motor home turned out to have electrical problems, a malfunctioning air-conditioner and heating problems. Numerous attempts to fix it were unsuccessful, and the motor home spent 180 of the 341 days they owned it in repair shops before the couple revoked its acceptance of the motor home.

The couple sued Monaco, among others, alleging that it breached its own written warranty, the federal Magnuson-Moss Warranty Act and the implied warranty of merchantability created by Illinois law. Monaco moved to dismiss the implied warranty allegation, arguing that Illinois law requires direct contact between a buyer and seller to create an implied warranty. In this case, the manufacturer pointed out, Barrington Motor Sales was the actual seller of the Monaco motor home. The plaintiffs responded by arguing that direct contact in this case was established by BMS's advertising and actual status as an "authorized Beaver Monaco dealership"; the fact that Monaco referred customers to BMS to deal with problems and customer service concerns; consumers' ability to find and contact BMS through Monaco's Web site; BMS's authorization to distribute Monaco publications; and the fact that plaintiffs had the option of picking up their new motor home at either company.

In its analysis, the district court agreed that BMS was acting as Monaco's agent. It dismissed arguments that past caselaw does not support such a finding, pointing out that unlike the current plaintiffs, none of the plaintiffs in the cases the defense cited showed any evidence for an agency relationship. The court did not agree that there actually was an agency relationship, or even that an agency relationship is enough to establish the direct contact necessary to prove an implied warranty under Illinois law. Rather, it pointed out that these are questions of fact that are improper to resolve with a motion to dismiss. Thus, the motion was denied. Dismissal motions by BMS and two parts manufacturers also failed.

Based in Chicago and in Oak Brook, Ill., DiTommaso-Lubin handles auto dealer and motor home dealer fraud and other consumer fraud litigation for clients in Wheaton, Naperville,Waukegan, Joliet, Aurora, Elgin and in other parts of Illinois, the Midwest and throughout the United States. In addition to helping individuals and families, our Chicago class action attorneys have successfully handled numerous consumer rights class actions. If you believe you're a victim of fraud and misrepresentations by an auto dealer or other business, please contact us as soon as possible to learn about your rights at a free consultation.

Our Chicago class action attorneys recently noted that the U.S. District Court for the Northern District of Illinois has conditionally certified a wage and hour class action alleging that Illinois Bell Telephone failed to pay overtime to its hourly employees. In Russell v. Illinois Bell Telephone Co., 08 C 1871 (filed April 1, 2008), Constemecka Russell alleges that Illinois Bell regularly required her and other hourly employees to work off the clock, and sought to conditionally certify these employees as a class and notify them of the action. Several of her colleagues have joined and submitted affidavits supporting her allegations. The case is pending, but the judge granted those motions Sept. 15 over most of Illinois Bell's objections.

U.S. District Judge Matthew Kennelly's opinion granting certification and notice repeats many of Russell's allegations about the unpaid overtime. Russell worked in sales for the company at a call center, and she alleges that she was paid only for time she spent logged into the call center's computer system. However, there were certain work tasks that she had to perform without being logged in, during lunch and rest breaks, including tasks like filling orders as well as time spent logging onto the computers and opening software programs. She estimated that she spent between 15 minutes and an hour per day doing this unpaid work, which sometimes would have entitled her to overtime.

In response to Russell's request for class certification and notice, Illinois Bell argued that class certification is inappropriate because it doesn't use the phone system to keep time, and thus there is no common policy or practice linking the proposed plaintiffs. The court was unimpressed by this argument. It pointed to multiple assertions by Russell that company practice was to require unpaid work before and after time on the phone, as well as affidavits by joining plaintiffs stating that managers explicitly instructed them to work off the clock. It also dismissed arguments that written policies were evidence that Illinois Bell complied with the law.

Illinois Bell also took issue with the notice Russell proposes to send potential plaintiffs, arguing that including the names of the judges involved might mislead recipients into thinking the judge endorses this lawsuit. The court dismissed this argument, pointing out that the letter is not on court letterhead, contains no judicial signatures and in fact contains an explicit disclaimer that the court has not taken a position in the case. Illinois Bell also objected to Russell's request for telephone numbers and partial Social Security numbers of potential plaintiffs, arguing that both privacy and the Illinois Rules of Professional Conduct bar their release. The judge agreed with respect to the Social Security numbers, but granted the telephone numbers, saying the interest in locating class members outweighs privacy concerns about home telephone numbers.

In the Sept. 15 ruling, the district judge granted only conditional certification; the court may choose to revoke certification if it believes the assembled class of plaintiffs isn't similar enough. That decision is pending, and as experienced Chicago class action lawyers, we know it is not likely to happen quickly. If you believe you might be part of a class of employees also forced to work off the clock, DiTommaso-Lubin may be able to help your pursue your own overtime class action. For a free consultation on your rights as an employee, contact us today.

In a business trademark dispute, the Seventh Circuit has ruled that large auto parts retailer AutoZone may proceed with its trademark infringement lawsuit against a two-store automotive services business in Naperville and Wheaton, Illinois, called Oil Zone and Wash Zone. AutoZone, Inc. v. Michael Strick, No. 07-2136 (7th. Cir. Sept. 11, 2008).

AutoZone sells auto parts and products, and has been well-known in the Chicago area since the early 1990s, according to the opinion. In that decade, defendant Michael Strick opened his Oil Zone stores outside Chicago, in Wheaton and Naperville. These stores sold automotive services such as oil changes, not parts or products; the Naperville location also offered car washes under the name "Wash Zone."

AutoZone learned of Strick's businesses in 1998, but did not contact him until sending a letter in February of 2003. It filed a lawsuit against Strick and his businesses near the end of that year, alleging service mark, trademark and trade name infringement and trademark dilution under the federal Lanham Act, federal unfair competition law, the Illinois Trademark Registration and Protection Act and Illinois common law. Both sides sought summary judgment, which was granted to Strick only, on his claim that there was no reasonable likelihood of confusion between his trademark and AutoZone's. Strick's defense of laches -- that AutoZone had waited too long to sue -- was not addressed. AutoZone appealed on the likelihood of confusion issue.

In its analysis, the Seventh Circuit noted that summary judgment in trademark cases is only appropriate when "the evidence is so one-sided that there can be no doubt about how the question should be answered." Packman v. Chicago Tribune Co., 267 F.3d 628, 642 (7th Cir. 2001). That case also laid down a series of seven factors courts must analyze to decide whether to grant summary judgment, which include questions of similarity, geography, consumer confusion and the intent of the parties. The court in this case concluded that six of those factors applied, including the similarity of the marks, the similarity of the products and their geographic proximity.

There was enough likelihood of confusion in this case for the case to survive summary judgment, the court concluded. It also left the issue of latches -- the time between AutoZone noticing Oil Zone and when it filed suit -- up to the district court. Thus, the district court's decision was reversed and remanded to the U.S. District Court for the Northern District of Illinois.

DiTommaso-Lubin's Chicago, Naperville and Oak Brook business litigation attorneys handle trademark disputes, franchise disputes and other Illinois business litigation from their Oak Brook and Chicago law offices. To speak one of our commercial litigation lawyers about representing your business, please contact us through our Web site or via telephone.

To learn more about our firm and the cases we have handled click here.

A federal breach of warranty case of ours IWOI v. Monaco Couch recently survived a motion to dismiss in U.S. District Court for the Northern District of Illinois. Our client, a limited liability company formed in Montana, bought a motor home in Illinois and allegedly discovered that it had a twisted frame causing it to list to one side, requiring constant steering corrections. On discovering this alleged defect, the individual owning the LLC brought it back to the dealership the very next day for the first of three unsuccessful repair attempts. Per the manufacturer's warranty, he submitted his complaints in writing to the manufacturer, Monaco Coach after these three repair attempts. The alleged defects remain, and we alleged in our filings that neither the manufacturer nor the dealer has agreed to accept the motor home for return or fixed the problems.

Our client sued both the manufacturer and the dealer under the federal Magnuson-Moss Warranty Act, the Illinois Consumer Fraud Act and other state claims. In defense, the defendants argued that our client was not a "consumer" within the meaning of federal law; this claim was flatly denied by the Court, which found no allegations in the Complaint to support it. On the Illinois Consumer Fraud Act issues, the Court also identified several alleged facts suggesting that Monaco Coach may well have known of the problems before the RV was sold, as we alleged. Thus, those claims also survived.

Furthermore, the trial court decided that our client could revoke its acceptance of the dealer's "AS IS" condition and the dealer's disclaimer of all implied warranties, a claim under the Illinois Commercial Code. The Seventh Circuit has addressed this issue in Priebe v. Autobarn, Ltd., 240 F.3d 584, 588 (7th Cir. 2001), in which it adopted an earlier ruling stating that consumers may revoke their acceptance even when the dealer has properly disclaimed implied warranties, if the evidence is clear that the vehicle's substantial defects clearly impair its value to the plaintiff. This allowed our client's Magnuson-Moss Act and state conversion claims to survive as well.

Although this case is at the trial court level, we believe the judge's interpretation of Seventh Circuit and Illinois precedent on Magnuson-Moss and the Illinois Consumer Fraud Act is good news for consumers. As auto and RV dealer fraud lawyers in Chicago, Naperville and Oak Brook, Ill., we believe automotive dealers take advantage of consumers' lack of education about their rights far more often than they are caught. When they are caught, they should not be allowed to wiggle out of liability for their actions with an unfair, high-pressure contract that the consumer has little room to renegotiate. Both the Magnuson-Moss Act (which governs how warranties may be offered) and the Illinois Consumer Fraud Act were specifically intended to help consumers fight this behavior.

If you believe you may be a victim of automotive dealer fraud or another type of consumer fraud and you're ready to fight back, please contact DiTommaso-Lubin online, via telephone or at our offices near or in Naperville, Wheaton, Oak Brook or Chicago.

To see more about our firm and the consumer rights, consumer fraud, lemon law and class action cases we have handled click here.

Judge Dow of the Federal Court for the Northern District of Illinois dismissed without prejudice a bona fide error defense in a putative Fair Debt Collection Act class-action for failure to plead facts akin to the "first paragraph in any newspaper story." The Court ruled that a bona fide error defense raises a claim of mistake, and therefore must be pled with factual particularity under Rule 9.

The Court held:

Notwithstanding the "disfavored" status of motions to strike and the "liberal pleading standard" in Fed. R. Civ. P. 8, the Court concludes that the motion is well taken. Because the defense at issue deals with an alleged "mistake" -- a "bona fide error" in the statutory parlance -- Defendant is obligated to comply with both Fed. R. Civ. P. 8 and 9(b). The standard under Rule 9(b) requires parties to state the circumstances of a mistake with "particularity." As the Seventh Circuit has explained, Rule 9(b) mandates that parties allege at the pleading stage "the who, what, when, where, and how of the mistake." GE Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1078 (7th Cir. 1997). Defendant correctly points out that Rule 9(b) permits pleaders to allege matters such as intent and knowledge in a more general manner. However, the remaining factual details of an alleged mistake -- for example, who made the mistake and when and how it occurred -- must be set out with "particularity" in the pleading. Although Defendant has added some detail to its original effort to plead its affirmative defense, there still is work to do before the Court reasonably can conclude that Defendant has complied with its obligation to provide "the first paragraph of any newspaper story" (GE Capital Corp., 128 F.3d at 1078) setting forth with particularity Defendant's version of the circumstances supporting the defense, as Rule 9(b) and the Seventh Circuit case law require.

To read the full opinion click here Konewko vs. Dickler, Kahn, Slowikowski & Zavell, Ltd.

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